Blueprint Medicines Corporation (NASDAQ:BPMC) Q4 2023 Earnings Call Transcript
Blueprint Medicines Corporation (NASDAQ:BPMC) Q4 2023 Earnings Call Transcript February 15, 2024
Blueprint Medicines Corporation beats earnings expectations. Reported EPS is $-1.82, expectations were $-2.04. Blueprint Medicines Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning. My name is Jerin and I will be your conference operator today. At this time, I would like to welcome everyone to the Blueprint Medicines' Fourth Quarter and Full Year 2023 Financial Results Conference Call. All lines have been on placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Jenna Cohen, you may begin your conference.
Jenna Cohen: Thank you, Jerin and good morning, everyone. Welcome to Blueprint Medicines' fourth quarter and full year 2023 financial and operating results conference call. This morning we issued a press release which outlines the topics we plan to discuss today. You can access the press release as well as the slides that we'll be reviewing today by going to the Investors section of our website at www.blueprintmedicines.com. Joining me are Kate Haviland, Chief Executive Officer; Philina Lee, Chief Commercial Officer; Suad Namouni, President of Research and Development; and Mike Landsittel, Chief Financial Officer. Christy Rossi, Chief Operating Officer and Becker Hewes, Chief Medical Officer are also on the line and available during Q&A.
Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements as outlined on Slide 3 and are subject to a number of risks and uncertainties. These may cause our actual results to differ materially including those described in our reports filed with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements and Blueprint disclaims any obligation to update such statements. With that I'll now hand the call over to Kate.
Kate Haviland: Thank you, Jenna and good morning, everyone. 2023 was a pivotal year for Blueprint Medicines, as we successfully brought forth AYVAKIT to become the first and only approved medicine for patients with indolent systemic mastocytosis or ISM. As we enter 2024 AYVAKIT will continue to be the foundation of our flagging business, with our early launch momentum through AYVAKIT firmly on the path to become a multibillion dollar product. Our growing revenue also enabled us to invest in additional compelling opportunities in our pipeline to drive longer term growth and deliver even more transformational medicines in the future. To achieve our goal this year, we're focusing on three key aspects of the business. Let's start with AYVAKIT's blockbuster potential and its ability to drive durable revenue growth for Blueprint well into the next decade.
We know that the first few quarters of launch are critical in dividing the sales trajectory for a product and we have driven a very strong first six months of results in this ISM launch, establishing the foundation for future growth. We've clearly demonstrated our ability to reach patients and drive revenue, achieving $204 million in global AYVAKIT revenue in 2023 and 84% increase over 2022. This compelling growth was primarily driven by the uptake in patients with ISM, who comprise about 95% of all patients with SM. A sizable rare disease patient population that we estimate at 70,000 prevalent patients in the US and Europe alone. Today, we are pleased to provide 2024 AYVAKIT revenue guidance of $350 million to $390 million, putting us on pace to nearly double our sales this year.
This revenue trajectory is very similar to other notable rare disease product launches, such as Soliris and Jakafi. With additional similarities being a compelling new first in class medicine approved to address a significant medical need in building a new multi-billion dollar market. These similar attributes and importantly similar sales trajectory is why we believe the launch of AYVAKIT is in SM is one of the most exciting rare disease launches happening across the industry today, and we are just now scratching the surface. In 2024, our primary focus is on reaching more patients with SM in the U.S. and also now in Europe with our EMA approval in ISM this past December. AYVAKIT's compelling efficacy and safety profile, coupled with the chronic nature of ISM, meaning that both new patient starts and the cumulative effect of patients staying on therapy for longer durations are important drivers of revenue this year and beyond.
I will hand it over to Philina next on the call and she'll go into more detail on AYVAKIT’s performance in Q4 and why we expect our strong and steady growth to continue, as we drive towards peak sales of greater than $2 billion. And yes, we are now pointing you all to a peak opportunity for AYVAKIT that is greater than 2 billion. For the past 12 to 18 months, since before our FDA approval on ISM, we have been citing a peace opportunity for AYVAKIT of greater than 1.5 billion. Now, based on the strong underlying fundamentals that are driving our early sales trajectory and the rapid growth and diagnosis that has led to an expanding SM market, our conviction has grown. The AYVAKIT will be able to achieve peak global sales of greater than $2 billion.
For the past 12 to 18 months since before our FDA approval on ISM, we have been citing a peak opportunity for AYVAKIT of greater than $1.5 billion. Now, based on the strong, underlying fundamentals that are driving our early sales trajectory and the rapid growth and diagnosis, that is led to an expanding SM market. Our conviction has grown that AYVAKIT will be able to achieve peak global sales of greater than $3 billion. Now let's turn to our second area of focus, advancing our portfolio targeting allergic inflammatory diseases where mast cells play a central role. Last month, I shared how we are focusing our investment in our most exciting research and development programs with opportunities to address high medical needs in large patient populations, and importantly, in therapeutic areas that play to our strengths by leveraging our expertise and our infrastructure.
A primary area of focus for us this year is to advance our portfolio of approved and investigational programs targeting mast cell mediated diseases. Blueprint is uniquely positioned to drive novel science in this space, because of our scientific leadership and targeting KIT and our proprietary insights into mast cell biology, an important area of science that has been historically underappreciated. With AYVAKIT and elenestinib, we are fully covering mast cell diseases driven by mutated kit, and this year we are expanding into a much larger opportunity driven by wild-type KIT with BLU-808. We are particularly excited about the potential for BLU-808 to impact fundamental biology and a number of large diseases with significant medical need starting the chronic urticaria.
We believe this program will move quickly with a higher than typical probability of success at this stage, given our track record of translating our discovery expertise and targeting KIT into clinical impact and now commercial success. Next week, we'll have a huge presence at the American Academy of Allergy, Asthma and Immunology meetings, often known as AAAAI, which is the largest allergy and immunology conference in the U.S. and taking place in Washington, DC this year. Later on the call, Suad will go into more depths on what we will be showcasing at AAAAI, as well as provide an update on our development stage portfolio. The third area of focus for us is maintaining a strong and durable financial position. Cash management will continue to be a priority area for us to focus on in 2024.
And as we sit here today, we see a clear path to profitability through the combination of strong revenue ramp and disciplined operating expenses, which will result in significant decrease in operating cash burn in 2024 and beyond. Mike will talk more about our financial results and our approach to balancing disciplined capital allocation and investing at the same time in our compelling near and long-term growth opportunities. Business development will also continue to be core to how we build and optimize our business in a sustainable way. To that end, I'm very pleased to say that we have made significant progress on a deal that will enable GAVRETO to continue to be commercially available to patients in the U.S., while minimizing the financial impact to Blueprint.
We look forward to updating you in the near future once that deal is finalized. Now, I'll hand it over to Philina, who will go into more detail in our commercial performance. Philina?
Philina Lee : Thanks, Kate. AYVAKIT achieved $204.2 million in net product revenues in 2023, representing 84% revenue growth over last year. Fourth quarter, revenues grew 30% quarter-on-quarter to $71 million with $63.6 million in the U.S. This growth was driven by several key factors. New patient starts a decline in our share of free goods, low discontinuation rates and high compliance. ISM is the clear growth driver with the majority of new starts at the 25 mg dose. Starting with patients on therapy. We hit a major milestone in January with approximately 1000 patients on AYVAKIT in the U.S. We were looking to see if this would come in December or January, and we're encouraged by the strong demand we see coming into Q1. We are thrilled to hit this thousand patient milestone this early in the launch, and we are focused on driving continued growth.
Today, we're setting revenue guidance that reflects the strong and steady continued growth we expect in 2024. As we get closer to realizing AYVAKIT's blockbuster potential. Our guidance range of $360 million to $390 million, assumed another year of more than 80% year-over-year revenue growth at the midpoint. We have good insight into the fundamentals driving our revenue, namely new patient starts, compliance, duration, free goods, and our international performance. This range reflects the inherent variability in those fundamentals. With guidance now in place, we're going to move away from providing a quarterly patient on therapy number. We will continue to share commentary on how the launch is progressing. Looking next at persistence, we expected strong persistence in ISM based on AYVAKIT’s clinical profile and the chronic nature of the disease.
And even though it's early days, all signs point to extended durations of therapy with low discontinuation rates and high compliance launch to date. It has been a surprise upside is how quickly we've moved the needle on our free goods share dropping to approximately 25%, as we grow the number of ISM patients on therapy. We have just reported our second strong quarter of revenue from our ISM launch. Let me tell you why we expect to sustain this growth in 2024 and beyond. Our commercial strategy is grounded in strong continued execution across multiple paths that will drive sustained growth in this market. First, we're ramping up our direct to patient marketing to further drive awareness and activate patients to seek treatment. The SM market is growing and we've only captured a small fraction of it so far.
Today, there are more than 20,000 diagnosed patients in the U.S. alone and about half are not well controlled on symptom directed therapies. We know this is a chronic market where patient preference is sticky. Once patients start AYVAKIT that positive clinical experience bodes well for chronic duration of therapy. Second, we're expanding AYVAKIT's prescriber base across all specialties and settings, and we're nowhere near saturation. We are seeing strong receptivity to AYVAKIT's profile among both Hem/Oncs and allergists in the academic and community settings. Breadth of prescribing is happening exactly where we want as we're motivating more allergists to prescribe AYVAKIT, and we're adding more prescribers at the top of the concentration curve.
You can see this in the chart on the left, which shows early AYVAKIT adoption among the top 400 SM providers who see about 4,300 unique SM patients. We continue to grow the breadth of prescribing here in light green, and we're also beginning to see depth of prescribing with providers who have already started two, three or more patients on therapy in darker green. As we expected the first positive experience is leading providers to recommend AYVAKIT to the next patients who are coming in for their scheduled appointments. Breadth of prescribing is an important lead indicator for long-term growth. We are highly encouraged to see prescriber breadth and early signs of prescriber depth at this point in launch. Over time, we expect to see the cumulative impact of growing this motivated prescriber base together with activating more patients to seek what's possible with AYVAKIT.
That's why I'm so confident about our ability to both grow and capture this market. We understand the SM market better than anyone else. What activates patients to move away from the symptom directed polypharmacy, they're habituated to and try therapy designed to address the underlying driver of disease, what drives providers urgency to treat, what influences their prescribing behavior and how to ensure that access is seamless for patients and providers. We are making great headway to disrupt entrenched attitudes and behaviors about disease control and treatment and to drive patients and providers to take action. With two quarters of strong performance and our guidance today, we are in the early innings of a pioneering rare disease launch. We are exactly where we thought we would be and we're delivering what we’ve said we would deliver.
As we've seen from the launch trajectory of other rare disease blockbusters, we are right on track to capture AYVAKIT peak opportunity of over $2 billion. With that, I'll hand it to Suad to share what you can expect from Blueprint Medicines at AAAAI.
Suad Namouni : Thank you, Philina. With more than 10 years of experience in systemic mastocytosis, we have built an extensive repository of knowledge to uncover insights into SM disease biology, our patient's journey, our prescriber management of the disease spectrum from ISM to ASM. At Blueprint Medicines, we are redefining how SM is treated across a broad network of academic leaders and prescribers with whom we are not only expanding the frontiers of innovation in SM, but also in many other mast cell driven diseases. With two oral presentations and seven posters, Blueprint will lead SM Science and Medicine at the 2024 AAAAI Conference. The long-term efficacy and safety data from Pioneer will continue to establish AYVAKIT as the standard of care and the only available option to treat the root cause of systemic mastocytosis.
Additional data will include health outcomes measures and reduction in polypharmacy. Turning now to our pipeline. The extensive data we generated from Pioneer and from real world evidence in SM coupled with the regulatory experience we gained it with AYVAKIT development are enabling us to build a robust differentiated development path for elenestinib, our next generation D816V mutated KIT inhibitor. We very recently presented data showing an AYVAKIT inhibitor driver clinically meaningful symptom improvement across those levels with well-tolerated safety profile. We see a lot of potential with elenestinib as a core part of expanding our SM franchise. Mast cells are well-established key drivers for many allergic and inflammatory diseases, where there is still a high medical need.
However, their role as therapeutic targets for inflammation has often been underappreciated in our industry. At Blueprint Medicines, we are building on our expertise in mast cell biology to identify targets and develop therapies for variety of mast cell driven inflammatory diseases. Last month, we presented for the first time more detail on the preclinical profile of BLU-808. A profile that met or exceeded all our key criteria. It is potent on wild-type kit, highly selective and it has drug properties compatible with once daily oral administration. Next week, we'll also share compelling in vivo activity of BLU-808 in models of mast cell activation and asthma that support our development strategy into the diseases and beyond. We are on track to submit an IND in the second quarter of this year, and then we will initiate the SAB mAb study.
Finally, on the solid tumor part of our pipeline, we are advancing our CDK2 inhibitor BLU-222 one of the most exciting programs that we have in clinical development. BLU-222 is an important value driver for Blueprint Medicine and one that we are looking to move forward in the context of a partnership. CDK2 is a clinically validated cell target with the potential to impact a large patient population with HER1 positive, HER2 negative breast cancer. BLU-222 has a very encouraging profile with a broad therapeutic window and best in class selectivity. Our goal is to pursue it in combination with approved CDK4/6 medicines to prolong breast cancer patient survival. We have had significant engagement on this program with the range of potential partners and those conversations continue very productively.
With that, I will turn a call over to Mike to review our financial updates.
Mike Landsittel : Thanks, Suad. Earlier this morning, we reported detailed financial results in our press release. For today's call, I'll touch on a few highlights. For the full year, total revenues were $249.4 million, including $204.2 million in net product revenues from sales of AYVAKIT and $45.2 million in collaboration and license revenues. Of these full year revenues, $71 million of AYVAKIT net product revenues were recorded in the fourth quarter. In 2024, we anticipate that we will achieve $360 million to $390 million in AYVAKIT net product revenues. We expect that the ex-U.S. AYVAKIT revenue split in 2024 will be approximately consistent with what we observed in 2023, as we launch first in Germany before expanding to other countries as pricing and reimbursement is negotiated.
Today's guidance illustrates we are on the path to capturing AYVAKIT's peak opportunity of $2 billion. This revenue growth coupled with expense, discipline and focused investment is what is accelerating our path to profitability. We do not anticipate any material collaboration revenue from existing collaborations in 2024. We are nearing a path forward for GAVRETO in the U.S. and plan to provide an update next week to coincide with a termination date for our existing agreement with Roche. We continue to expect that the wind down of the Roche collaboration for GAVRETO will result in significantly lower year-over-year operating expenses related to GAVRETO and will have no material impact to our overall expense plans in 2024. Our total costs and operating expenses continue to decline and were $735.7 million for the full year and $177.1 million for the fourth quarter.
We anticipate our R&D expenses will continue to decline in 2024, as we wind down our early stage EGFR clinical programs partially offset by increased investments in our programs for mast cell mediated diseases, specifically BLU-808. We expect only a small increase in SG&A expense as we gain operating leverage from our commercial infrastructure and continue to drive significant increases in revenues. Last month, Kate shared our vision for maintaining financial strength at Blueprint. We have a focused spending plan that allows for continued reduction in operating expenses, while also investing in opportunities for longer term growth. We have prioritized capital allocation towards a portfolio built around mast cell mediated diseases, solid tumors implicated by cycling dependent kinase biology and ongoing early research efforts, as we believe that these areas provide the best opportunity to drive long-term value.
Entering 2024, we are in an exceptionally strong and durable financial position with $767.2 million in cash. We are commercializing AYVAKIT globally a first and best-in-class medicine that is growing revenues on the way to blockbuster status. We expect our operating cash burn to further decline in 2024, even as we advance our portfolio of high potential medicines like BLU-808. Our pathway to profitability is becoming clearer, solidifying our financial profile and our ability to generate long-term value. With that, I'll now turn the call back over to the operator for any questions. Operator?
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